Legal Insurrection readers will recall the California legislature’s attempt to create a special government fund as a “charity” for taxpayer donations to mitigate the loss of state and local tax (SALT) deductions in the recently passed GOP tax plans.

The politicians must have realized the approach was full of fail, so now leaders of several blue states are planning a lawsuit to block the entire overhaul package. California may join in.

New Jersey and Connecticut are joining New York in planning to file a lawsuit to block the Republican-led federal tax overhaul, the Democratic governors of the three states announced Friday.

And California could join them.

Andrew Cuomo of New York, Dannel Malloy of Connecticut and Phil Murphy of New Jersey announced Friday that they’re talking to leaders of other states that stand to be hurt by the federal tax plan that’s expected to cost taxpayers in their states billions of dollars.

“We’re going to be working together to form a multistate coalition to challenge this in court,” said Cuomo, a potential 2020 White House contender who announced his intention to fight the tax overhaul earlier this month.

Murphy said he expects the suit to be filed within weeks. No decision has been made on where the action will be filed, Malloy said.

The new tax code passed by Republicans in Congress and signed into law last month by Republican President Donald Trump caps a deduction for state and local taxes at $10,000. That deduction had been popular in high-tax, Democratic states like New York, Connecticut and New Jersey, where many homeowners now face big increases in their federal tax bill.

“This is an assault on those states,” Malloy said.

Malloy asserts the law isn’t legal. Specifically, the three governors cite the rules developed at the time of the first national income tax tax, set during the Civil War.

Cuomo invoked a law signed in 1862 by Lincoln — who approved the first national income tax — that he said demonstrates that state and local deductions of taxes are protected by “state’s rights” and to avoid “double taxation.”

The lawsuit is still in the process of being prepared, but counter-arguments to the premises based on the 1862 rules are already being honed.

Bloomberg offers a humorous and in-depth look at the Blue States’ desperation at the loss of the SALT deductions and all of their proposed solutions. The assessment of the legal experts consulted on this particular proposal is that the governors’ case is dead-on-arrival:

…[The lawsuit] is an intriguing strategy. But alas for the citizens of New York State, probably a doomed one.

I spoke to Michael Dorf, a law professor at Cornell who recently outlined the possible lines of attack that such a suit could take. For one thing, they could argue federalism, a tack that even conservative judges should find appealing. “There’s an argument that the Sixteenth Amendment does not empower the federal government to treat money that is owed to state and local governments as part of the tax base,” he said. “If you go back to the Sixteenth Amendment it’s clear that states were concerned about this at the time of the drafting.”

The problem? “The hard part there for the plaintiff states, while that was a concern for the people who adopted the Sixteenth Amendment, it’s not anywhere in the amendment.”

…Jonathan Adler, who teaches law at Case Western, was even more pungent, and succinct. While we don’t know what form the complaint will eventually take, since the states haven’t yet drafted it, “What we have seen [so far] would suggest that there is some sort of constitutional right to a SALT deduction. To state the claim is to refute it.”

Imagine, if you will, that this lawsuit is successful. Then, ponder the likely response of a voting age, tax-paying American who receives his first paycheck after the block.

nope havana, koobah or buenos aires, argenteenah
along with the dreamers or sleepers.

———————-
Miles, a nebbishy clarinet player who also runs a health food store in NYC’s Greenwich Village, is cryogenically frozen, and brought back – 200 years in the future, by anti-government radicals

The Democrats are so disillusioned; they truly think they can win be simply appeasing their base and resisting Trump. I cannot wait to watch Trump unveil his infrastructure spending plan, the kind of thing democrat leaning independents love, a few months before the election and the shapes the democrats will contort themselves into out of desperation to “resist” it.

Frost warnings in h3ll! Liberals now champion ‘states rights’ and argue against greater taxation? Strange days, indeed, but all for naught.

“The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” – Article I, Section 8, Clause 1 of the U.S. Constitution

From the article: “The new tax code passed by Republicans in Congress and signed into law last month by Republican President Donald Trump caps a deduction for state and local taxes at $10,000.”

That meets the definition of ‘shall be uniform throughout the United States,’ and well within the Constitutional power of the Congress.

I think the only discrimination and assault taking place is all self-inflicted by democrats.

The way I interpret that makes an even stronger argument for flat tax. No matter if you make $1 or $1B annually, everybody pays the same percent. 10%, 15%, 20% or whatever it needs to be; everybody pays their “fair share”.

My first thought was how DACA and tax cuts have exposed the Democrats as the party of rich whites. Trump takes the Dems demand to legalize 800K “Dreamers”, and doubles it offering amnesty for 1.6M. The Dems come out screaming that he’s a racist after the failing strategy of putting illegal immigrants above citizens and funding the military.

Now, after years and years of screaming about Republican “tax cuts for the rich at the expense of the middle class”, and making the rich pay their fair share, Trump and Republicans pas a tax reform that dumps piles of cash on the middle class while raising taxes on the rich and it’s “Armageddon”.

This creates the golden opportunity for republicans to miss on hammering this home to voters.

To offset the loss of middle class voters, blue state governments are now looking at automatically registering illegal aliens to vote when they get a drivers license. This reveals the wonderful foresight of having an electoral college to counterbalance this. California already casts their electoral votes for dems. Even if 100% of the voters vote D, it doesn’t impact the outcome.

To offset the loss of middle class voters, blue state governments are now looking at automatically registering illegal aliens to vote when they get a drivers license.

This is BLATANTLY ILLEGAL! Federal law does not allow ANY “automatic” registration of A CITIZEN, let alone non-citizens – not in any regulation, statute, or Act – and CERTAINLY not using the cover of “motor voter.” People must CHOOSE to vote, and complete the requisite LEGAL forms, and in some states declare their party affiliation.

If CA (and/or any other state(s)) pass this, then I hope the DoJ goes after them with STIFF fines, pulling all federal funding for all state residents, etc.

Full-out. No mercy. No holds barred.

Go out and GET THEM, and MAKE THEM PAY till they are a crying puddle of liberal mess, since MONEY is all they seem to recognize as important, that gets their attention (just THEIR wallets – and federal coffers drained to THEM, of course).

It is really rather hilarious to see them claim that an 1862 set of precedents apply to an amendment passed in 1913, when the fact that it was a new Constitutional amendment nullified all previous decisions on the matter.

It’s like saying Dred Scott still maintained it’s precedential value even after the 13th, 14th, and 15th amendments.

And when they claim that this tax law discriminates against one group of taxpayers while benefiting another – do they realize that the ONLY tax law that doesn’t do that is a flat tax that has no deductions at all. Funny, I don’t think its the Dems who have been calling for that.

What will sink this lawsuit is the text of the 16th Am. itself which reads in pertinent part, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived.”

These states will soon discover, if they do any pre-complaint legal research, that the courts have developed a long-standing doctrine that states that deductions from income are “matters of legislative grace.” That is, Congress could, as the amendment clearly states, “lay and collect taxes on [the full amount of] income” without any reductions. Anything less than taxation “on incomes [] from whatever source derived” is solely within the power (aka grace) of Congress.

Dead-on point. Perhaps the lawyers for these states will stumble across this holding from the USSC before they file their complaint, “Whether and to what extent deductions shall be allowed depends upon legislative grace; and only as there is clear provision therefor can any particular deduction be allowed.”

New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934),

So long as the tax law is being uniformly applied to all persons, this proposed law suit will not survive any motion to dismiss. If Ps lawyers don’t discover the legislative grace doctrine, the DOJ most certainly will.

Among other others one argument could be that the states have ‘broad standing to sue the federal government to protect state law:’

“The Supreme Court has long granted the States special
access to the Article III courts in order to protect state law. I
argue that States have standing to assert this interest not only
against private parties, but also against the federal government.
Accordingly, States may challenge federal statutes or
regulations that preempt, or otherwise undermine the enforceability of, state law. But States should have no special role in ensuring that the federal executive properly implements federal law. States have special standing to protect federalism
principles, not the constitutional separation of powers.”

Similar to the incorrect DACA ruling, the courts can’t have it both ways: if the response to removal of SALT is problematic for blue states, then enactment of SALT originally was burdensome for red states, and should be disallowed.

Likewise in DACA, if the initial EO directive enacting DACA was perfectly acceptable, then reversal of that action must be acceptable as well.

Actions are not unidirectional.

Plus, the federal government has absolute authority over federal taxation (see above), and Congress may (must) enact such taxation.

States themselves are welcome to do whatever they please underneath that structure, but have no say in the federal configuration.

Well remember to actually file suit you don’t need much. You can basically sue for anything and file that suit. Now whether that suit survives things like standing and the like is a completely different animal entirely.

If they had a case, standing wouldn’t be an issue. They represent their citizens, who will be hurt by having to pay income tax on part of what they pay in state and local taxes. The problem here isn’t standing, it’s that there’s no case.

You’re not talking about standing, you’re talking about there not being a case. If there were a case then the citizens affected would have standing, and their states would have standing to represent their interests since it’s a matter of state taxes. The problem is there is no case. This is entirely up to Congress, which has made up its mind, and no court can tell it otherwise.

Wow. It takes a special kind of idiot to read “Save for a narrow exception, standing is also lacking when a litigant attempts to sue to contest governmental action that he claims injures him as a taxpayer”, and somehow twist that into “Taxpayers, and states, lack standing to sue in federal taxation matters, except for very narrow exceptions”. I didn’t think anyone could possibly be so stupid, but it really seems like you’re not faking it.

Ask yourself, if taxpayers couldn’t sue over taxation matters, who could? How do you suppose any tax case could ever make it to court, and how could the volumes and volumes of tax law that we have exist?

The sentence you read is completely uncontroversial, and doesn’t mean anything even remotely like what you imagined. Of course being a taxpayer doesn’t magically give you standing to challenge everything the government does that has nothing to do with taxation. As the court cited at your link said, there is no direct relationship between government expenditure this year and your tax bill next year. It’s not as if the total government expenditure were simply divided each year by the tax base, and everyone got a bill for their share of government. That may be how some municipal governments are run, but it’s not how the UK was ever run, and it’s never been how any state or the US has ever been run. But any taxpayer has standing to challenge anything that directly affects his tax bill, and states have standing to challenge anything that directly affects all their citizens’ tax bills, as well as their own tax collections.

The SALT deduction wasn’t eliminated, only limited to $10,000, and it would only be taken if it and other itemized deductions exceed $24000. Your other deductions (property tax, charitable contributions, mortgage interest, etc.) would have to be more than $14K. For example, a family making $100K in VA wouldn’t exceed the limit as only about $4500 in state income tax was paid, one would have to make over $200K to even reach it.

This hits very high income earners exclusively, forcing them down to the lower $24K standard deduction instead of itemizing well over that plus personal exemptions ($20,250 in 2017 which are eliminated in 2018 in favor of doubling the child tax credit to $2K each).

That same $100K family with 2 under age 17 children will see a total federal tax cut of about $900 even with the loss of personal exemptions, even more if they have a large ($500K) Mortgage as that will put them over $24K for itemizing.

Note that the left may cry over the “unconscionable” tax breaks for the “rich and corporations”, but they are willing to go to legal *war* over a tax hike on high incomes.

How can the Democrats in the specified Blue states actually put forth legislation or legal action that only benefits state coffers and those of high income? That has got to be one hell of a sales pitch that I haven’t heard yet.

The Revenue Act of 1862 was time limited to 1866 and the Revenue Act of 1864 which modified the Act of 1862 was allowed to expire in 1873.. IANAL but how can you sue based on a law that has expired or been repealed? Does not your law suit have to have a basis in actual law?

The fact that those acts expired shouldn’t be a problem. If they established a constitutional principle, that principle should still be alive. But they didn’t and couldn’t. It’s well-established that no congress can bind its successors.

Even if you could prove that the 1862 Congress thought it would be unconstitutional to treat money paid to the states as income to be taxed by the US, even if the 1862 act had explicitly said so, it would be completely irrelevant. The opinions of the 1862 Congress are no more authoritative than those of commenters on this blog.

Yet one more example of Democrats not being to see beyond their Pinocchio size noses. This stunt has zero chance of succeeding. And imagine if it did; an entire deluge of red states would begin suing the federal government in kind over confiscatory tax policies. This one tax change, SALT, has forced the Democrat party into arguing FOR tax cuts for the rich. Still not tired of winning!

New Jersey, Connecticut, New York and possibly California need to face up to the fact that they need to pay for their own thrills. If the people of those states are fine with bloated state and local government that is not a problem but the rest of America should not continue to supplement it. Drain the SWAMP(S)!

FWIW – for tax years 2017 and prior – virtually everyone in the high income tax states (NY, CA, NJ, etc) who had 10k in property tax generally had high state income tax and as a result was paying alternative minimum tax – There is no deduction for either property tax or state income tax when computing AMT. Therefore the deduction was zero – moot.
In 2018 – The AMT exemption is much higher so these NY CA etc residents will be paying less tax even after losing the property tax deduction – So what is their complaint?

This nation is based upon a speration of jurisdictions. The states are free to pass any taxation plan that they wish, without federal approval. And the Federal government can set any taxation rules that it wants.

The blue state governor are arguing that the current tax schedule, which is uniform across all the states, is discriminatory because these states choose to tax their residents at higher levels than other states do. How is that the fault of the federal government? It sounds pretty dog gone fair to me. What they are really upset about is that the rest of the country’s taxpayers will not be subsidizing the citizens of the blue states anymore.

I guarantee that if it’s filed in either the Fourth or Ninth circuit, they will find a district judge to slap a nationwide injunction on the tax bill. In the Fourth, because somehow it violates the establishment clause; in the Ninth, because Trumps tweets about taxes during the campaign demonstrate an anti-Muslim bias.

This country can’t survive without the working class, we work hard and all our lives to keep the country moving forward and pay to keep it safe, we’re happy with that but we’re also tired of being abused by the government, so if President Trump wants to help make us great again,and help the working class,put bullying him aside and step up to the plate and help.

That’s all that needs to be said. If these governors were really concerned about the impact on their states’ respective fiscs they wouldn’t be wasting any of that precious money on such a sure loser of a court case. I wish I could say they would earn sanctions from whichever court they filed in, but courts are far too lenient in applying the prohibition on wasting their time with frivolous suits.

When you yank the binkie out of the babies mouth you get a lot of crying, screaming, kicking, and soon an exhausted sleeping baby. This will not last long and all of the high tax states will have their bloomers in a bunch when they realize how many of their taxpayers will hit the 10,000$ limit.

It will be another hot buttered popcorn moment when the phones start ringing in the state capitols.